As you may have seen from recent coverage, there is a huge amount of hype surrounding the Internet of Things (IoT). The July 2014 Gartner Hype Cycle for the Internet of Things states that ‘Overall, the IoT Hype Cycle is particularly light on the mature side of the Hype Cycle. This is fully expected, because it reflects the fact that many of the IoT technologies are in the early part of their life cycle and adoption’1. Being at the summit of any hype cycle may lead to the prognosis that the only way is downhill in 2015. This blog explains why CGI believe this may not be the case – if companies think differently about how they plan their IoT journey.
As can be seen from Gartner’s news release and the graphical representation of the Hype Cycle for the Internet of Things, 20141 , the chart estimates that that IoT will reach the ‘Peak of Inflated Expectations’ in 5 years to 10 years. Before we get there we have to head through the Trough of Disillusionment, which we believe will leave a number of companies going out of business or being absorbed. Examples of this recently;
- Axeda: Bought by PTC for $170M
- ThingWorx: Bought by PTC for $130M
- Neul: Bought by Huawei for $25M
- Xively: Bought by LogMeIn for £5M
- SmartThings: Bought by Samsung for $200M
- Nest: Bought by Google for $3.2Bn
- Revolv: Bought by Google and shutdown
- Dropcam: Bought by Google for $555M
What is clear to us is that the big money is being spent in the chase for the IoT-enabled home with the focus on domestic consumers. And yet at the same time there is concern over the size of that market and how the business case stacks up – indeed both Philips and Samsung are getting out of the Smart LED business. The irony is that the home market is really the Intranet of Things. Outside of the home, the IoT message is yet to gain traction and, if Gartner is correct then we believe traction will become harder to get. CGI doesn’t believe this is necessarily the case, and this is reflected in our distinct approach. We call this the CGI start small approach.
Rio de Janeiro was possibly the last monolithic smart city plan where IBM delivered a traditional end to end solution. Whilst the results were very impressive, other cities are not following this pattern. London, which has a world leading integrated transport infrastructure has a distributed plan, where different suppliers provide different parts of the solution, but the city itself stays in control and the value of each part is managed.
The CGI Vision for IoT is ‘start small, but start’. We consider that planning a ‘big bang’ system is the recipe for failure, cost overruns, project slippage and lack of benefits. In 2003 you could sell a solution just on carbon savings, but now any new system has to pay for itself and we welcome that change. We feel that any IoT initiative should start with a small (sub €100k) pilot or proof of concept to measure the value that would be gained from a system before a full roll out is planned. Preferably this pilot would supplant some of the bid process.
Having a pilot not only gets an immediate value benefit to demonstrate how the system could work and aids buy in, but it also encourages Agile thinking in the client. Avoiding the ‘big bang’ also avoids ‘big fail’.
Many organisations such as Google and Apple talk about IoT as an all-encompassing solution. CGI however see IoT as a component of an end to end business benefit. Success will come from finding that benefit and addressing it. As IoT heads into the ‘trough’ there will be a wider realization that this is the key focus. As CGI has built its platform around this concept we will be ideally placed to help companies build on this cycle of success…only taking the next step on their IoT journey upon successful completion of the previous project.
Having Agile delivery from the first pilot has a number of benefits compared to classical M2M delivery paradigms. Project teams are seeded from the core platform project and organically grown with the delivery requirements, meaning that large teams do not need to be supported throughout a development, whilst ensuring that delivery method and quality are maintained. It also allows a clear progression of work between different teams, allowing a small consultancy team to lead the early phases of a project and phasing in a project team as ready. By comparison the ‘M2M’ way of project development would be a full waterfall delivery starting from a clean sheet.
The slow start helps us fulfill the goal of IoT being a journey, rather than a destination.
Example of a market changing:
Around 2002, Carbon footprint was a major cause for concern, and projects could be justified just on carbon saving. A number of companies sprang up to provide control over street lighting as by monitoring faults (lights left on) and ensuring turn on/off times were optimized. As soon as the focus came off carbon savings the systems had to pay for themselves as part of PPP schemes. When this occurred the cost:benefit analysis suddenly changed, and a system had to cost less than £1 per month per column to break even. In order to try and enhance this, manufacturers then started working on smart Ballast systems that could extend lamp life as well as given an ‘hours remaining’ measurement. Unfortunately by the time this was developed, the only real application left was motorway lighting, as LED street lights had come on the market and proved capable of far higher cost savings.
In a report on the street light replacement in Birmingham it was stated that all the target costs savings were achieved because LED street lights enabled a 30% reduction in the number of columns.
What this demonstrates is that technology, and business requirements evolve, and any solution needs to be flexible and agile enough to absorb that change and continue to deliver benefits.
CGI embraces the slide of IoT into the trough of disillusionment as it moves the discussion from ‘fun toys’ into focusing on real business gains that new insights and processes can drive. Our platforms and methodologies are all designed to deliver real value from the beginning and evolve with changing requirements.
Source: Gartner, Gartner Hype Cycle for the Internet of Things, 2014, 21 July 2014
1 Source: Gartner, Press Release, Gartner's 2014 Hype Cycle for Emerging Technologies Maps the Journey to Digital Business, August 11, 2014, http://www.gartner.com/newsroom/id/2819918
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